Japan has committed an additional 5.70 billion yen (approximately NPR 5.50 billion) to fund the completion of the Nagdhunga Tunnel Project. Ambassador of Japan to Nepal, Maeda Toru, and Government of Nepal Secretary Ghanashyam Upadhyay signed a Memorandum of Understanding on Tuesday, formalising the supplementary loan and reaffirming a bilateral development relationship that stretches back nearly a decade.
A road long in the making
The Nagdhunga Tunnel has been one of Nepal’s most anticipated infrastructure projects. The Nagdhunga pass, situated on the busy Kathmandu-Prithvi Highway that links the capital to Pokhara and the western Terai, has long been a notorious bottleneck. Steep gradients, sharp bends, and heavy freight traffic regularly bring the route to a standstill, adding hours to journeys and raising costs for businesses and commuters alike.
Recognising the corridor’s strategic importance, Japan stepped in as the primary financier. In December 2016, the two governments agreed on an initial loan of 16.636 billion yen under the Japan International Cooperation Agency (JICA) framework. Ground was broken in 2019, and the twin-tube tunnel, bored through the hill that has for generations tested the patience of travellers leaving Kathmandu, slowly began to take shape.
Why the extra funding was needed
Like many large civil engineering projects globally, Nagdhunga was not immune to the economic turbulence of recent years. Pandemic-era supply chain disruptions, a sharp rise in the cost of construction materials, and certain technical complexities encountered during the tunnelling work all contributed to a budget shortfall. Rather than allow the project to stall at an advanced stage, Japan agreed to bridge the gap. With the new tranche, the cumulative Japanese loan for the project now stands at 22.336 billion yen, making it one of the largest Japanese development loans channelled into Nepal’s transport sector.
What the tunnel means for Nepal
The tunnel’s opening, targeted for later this year, is expected to be transformative. Vehicles will be able to bypass the winding Nagdhunga ascent entirely, cutting travel time between Kathmandu and Naubise by a significant margin and reducing fuel consumption and vehicle wear on one of the country’s most heavily trafficked roads.
Beyond convenience, faster and more reliable connectivity will lower logistics costs for goods moving in and out of the Kathmandu Valley, support growth in tourism toward Pokhara and Chitwan, and open up new opportunities for communities along the corridor. For Nepal, the Nagdhunga Tunnel represents more than infrastructure. It is a result of patient, partnership-driven investment and stands as a testament to what Nepal and Japan have built together over nearly a decade of collaboration.